TMI Blog2018 (2) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... stical purposes. Addition u/s.36(1)(va) - assessee has not deposited the employee share of EPF within the due dates - Held that:- Following the decision in the case of Essae Teraoka (P) Ltd.vs DCIT (2014 (3) TMI 386 - KARNATAKA HIGH COURT) hold that employees contribution to PF and ESI is allowable deduction to the assessee if deposited before due date of filing of return u/s.139(1)of the Act. In the instant case, it is not in dispute that the contribution to PF was deposited by the assessee before due date of filing the return of income u/s.139(1) of the Act. Thus delete the disallowance of employees contribution to PF - Decided in favour of assessee - ITA No.206/CTK/2017 - - - Dated:- 29-11-2017 - Shri N.S. Saini, Accountant Member For the Assessee : Shri None For the Revenue : Shri D.K.Pradhan, DR ORDER This is an appeal filed by the assessee against the order of the CIT(A)-1,Bhubaneswar, dated 18.01.2017. 2. In ground No.1 of the appeal, the grievance of the assessee is that the CIT(A) is not justified in sustaining the addition made by the AO u/s.40(a)(ia) of the Act amounting to ₹ 2,07,642/-. 3. Brief facts of the case are that the AO o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent assessment year of the assessee which is 2012-2013. I find that the Hon ble Delhi High Court in the case of Ansal Land Mark Township (P) Ltd., 377 ITR 635 (supra) has held that the second proviso to Section 40(a)(ia) of the Act is declaratory and curative in nature and has retrospective in operation w.e.f 01.04.2005. Therefore, I find that the order of the CIT(A) to that extent is not tenable. Further, I find that the CIT(A) observed that no evidence was produced before him to show that the recipient of the amount have paid the due taxes by showing the amounts as their income in their return of income filed by them. Therefore, I feel it fit and proper to restore this issue to the file of AO for examination as to whether the recipient of the amount have paid taxes on the amounts received from the assessee or not. If the AO finds that the recipients of the amount have paid due taxes on the amount received from the assessee, then no disallowance u/s.40(a)(ia) of the Act should not be made by the AO. The assessee is also directed to file all evidences in support of the claim that the recipients of the amount have paid due taxes on the amount received from him. With this observatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for filing the return u/s.139(1) will not call for any disallowance u/s.36(1)(va) of the Act. On the other hand, ld. DR supported the orders of lower authorities. 11. I find that the Hon ble Karnataka High Court in the case of Essae Teraoka (P) Ltd.vs DCIT, (2014) 366 ITR 408 vide judgment dated 4.2.2014 held that the word contribution would mean in EPF and ESI Act refers to both employees and employers contribution to PF and, therefore, no disallowance is to be made under section 43B. Therefore, deduction is also available to employee s contribution to PF U/S.43B of the Act. Further, the Hon ble Rajasthan High Court in the case of CIT Vs. State Bank of Bikaner and jaipur (2014) 363 ITR 70 (Raj) (HC) and Jaipur Vidyut Vitaran Nigam Ltd., (2014) 363 ITR 307 (Raj) held that section 43B overrides section 36(1)(va) and deduction is available for employees contribution u/s.43B of the Act To same effect is the decision of Hon ble Uttarakhand High Court in the case of CIT vs.Kichha Sugar Company Ltd. (2013) 356 ITR 351 (Uttarakhand HC) order dated 20.5.2013. To the same effect is also the decision of Hon ble Rajasthan High court in the case of CIT vs. Udaipur Dugdh Utpadak Saha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case the Tribunal is correct in holding that the provision for gratuity was not made towards approved gratuity fund and that the gratuity has not become payable during the financial year and that the provision has not been made on actuarial valuation basis? 10. Learned counsel for the assessee submits that the Tribunal was not justified in not following its earlier order dated 20.12.2001 passed in the case of M/s. Sintra Ltd. v. ACIT I.T.Appeal No. 497/Pat/1996 in which under similar circumstances, it was held that the treatment meted out to the employees' contribution by disallowing the same was also on the basis, i.e., the delay in credit to the appropriate authorities, which was condoned by the appropriate authorities and thus the contention of the Department was found to be without force and it was held that there was no reason to consider the amount as income from other sources of the assessee and the addition was deleted. It is submitted that the present matter is practically on the same footing as the employees' contributions were paid within due date of filing of return and as a matter of fact some of the amounts of employees' contribution was depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade therein on account of difficulties felt in complying, with the provisions of the said section vis-a-vis the period prescribed under the Employees Provident Fund Act. Earlier by way of the first proviso the benefit of deduction was restricted only to tax, duty, cess or fee paid after the closing of the accounting year but before the date of filing of the return of income under Section 139 (1) but not to labour welfare funds. The second proviso was then inserted to allow deduction of contribution to, inter alia, any provident fund if made before the due date as per the Employees Provident Fund Act during the previous year. This again resulted in implementation problems as a result of which the second proviso was deleted and the first proviso was amended bringing about uniformity by equating tax, duty and fee with contribution to labour welfare funds. It was made clear that the benefit of deduction would be applicable, provided the payments are made before the due date for filing of the return. 14. From a perusal of the aforesaid decision, it is evident that it does not specifically refer to the employees' contribution or employer's contribution and both have been tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ab and Haryana High Court. 12. It is also settled position of law that if there are contrary views of different High Courts and none of them is the Hon ble Jurisdictional High Court, then the decision favourable to the assessee should be followed. This view is supported by the decision of Hon ble Supreme Court in the case of CIT vs. Vegetables Product Ltd., 88 ITR 192 (SC). Therefore, respectfully following the decision of Hon ble Karnataka High Court in the case of Essae Teraoka (P) Ltd.vs DCIT (supra) and other decisions referred above (supra), I hold that employees contribution to PF and ESI is allowable deduction to the assessee if deposited before due date of filing of return u/s.139(1)of the Act. 13. In the instant case, it is not in dispute that the contribution to PF was deposited by the assessee before due date of filing the return of income u/s.139(1) of the Act. Therefore, I set aside the orders of lower authorities and delete the disallowance of employees contribution to PF of ₹ 1,25,576/- and allow this ground of appeal of the assessee. 14. In the result, the appeal of the assessee is allowed partly for statistical purposes. Order pronounced in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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